MTQ Corporation

I have received my new MTQ shares on 9Jan12 from having opted to receive scrips for the $0.02/share Interim dividend for FY12 (ending 31Mar12). Now I am looking forward to the full-year results expected in May12 and the Final dividend.

I have also received my scrip shares fully credited to my CDP account.

Interestingly, the announcement below sheds some light on the scrip dividend scheme for 1H FY 2012 interim dividend:-

http://info.sgx.com/webcoranncatth.nsf/V...B0025329C/$file/Scrip_Dividend_Allotment_of_shares.pdf?openelement

Shares before scrip issue = 97,495,153
Shares issued for scrip = 265,889 (New)
Shares after scrip issue = 97,761,042

Cash Outlay Assuming all dividends paid out in cash = $1,949,903 (97,495,153 shares x $0.02 interim dividend).
Using $0.73 scrip dividend issue price, assuming ALL shareholders received scrip, a total of 2,671,100 shares should have been issued.

Thus, scrip take-up rate = 265,889 / 2,671,100 = about 10% (9.95% rounded up).

This seems much lower than prior scrip dividend exercises conducted by MTQ. This is my third round of scrip dividend received, and the previous two rounds were issued at a scrip price of 84 cents and 83.5 cents respectively. With a lower scrip dividend price, shouldn't more shareholders opt for scrip to receive more shares, since absolute $ value of the dividend is constant?

Maybe those who received scrip at 84 and 83.5 cents realised they can buy at lower market price if they want more shares. Just checked that 10 lots are offered at 80 cents today as I write.

(11-01-2012, 10:58 AM)wsreader Wrote: Maybe those who received scrip at 84 and 83.5 cents realised they can buy at lower market price if they want more shares. Just checked that 10 lots are offered at 80 cents today as I write.

That would certainly be true if you consider the previous two scrip dividend exercises, when the market price then was much higher.

But for the recent exercise, the scrip issue price was set at 73 cents. Yet the take-up rate remained low at 10%. It would be difficult to purchase shares from the open market at this price (buyer 74c, seller 80c), and the illiquid nature of this counter also makes it doubly tough.

So I still wonder why the take-up rate was so low?

uncertain times, better to have cash in pocket?

I believe people prefer to receive cash dividend rather than scrip shares which may be difficult to sell due to the illiquid nature of the stock now (huge spread). The 10% discount would usually give some gains upon selling ? Overall, based on the scrip exercise over the past year, it seems most people (including myself) prefer to receive cash.

(11-01-2012, 03:23 PM)Nick Wrote: I believe people prefer to receive cash dividend rather than scrip shares which may be difficult to sell due to the illiquid nature of the stock now (huge spread). The 10% discount would usually give some gains upon selling ? Overall, based on the scrip exercise over the past year, it seems most people (including myself) prefer to receive cash.

A pertinent point, Nick. Thanks.

The 10% discount does not really equate to any significant "gains" even if you sell at prevailing market price. Reason is due to illiquidity and also the wide bid-ask spread. Plus, the odd lots problem you mentioned.

Anyhow, let's see if the scrip continues to be offered. I will then decide if I wish to continue to receive it.

Factors such as 10% discount too little, illiquidity, and wide bid-ask spread were also valid at the time of the 84 and 83.5 cents scrip dividend exercises. It still does not explain why this time the take-up rate is much lower than prior scrip dividend exercises, despite the lower scrip dividend price.

Today, NMS announced the sale of its US Diving Business to a private equity firm for A$0.5 Million:

http://www.asx.com.au/asxpdf/20120214/pd...3c5rfx.pdf

This business was expected to lose A$100,000 per month if not for the divestment, and was part of the restructuring efforts which the Company had planned for. This represents the final key milestone in rationalizing all assets and business divisions, and NMS will continue to focus on profitable divisions from now on.

Some good news - NMS has announced a net profit of A$1.278 million for 1H FY 2012 ended December 31, 2011. Apparently, after rationalizing the business, the layer of fixed costs was taken out and enabled the Company to achieve some level of profitability. [See Attached]

NMS share price surged 0.3 cents from A$0.027 to A$0.03 after the news was released.